Sarko Company had 300,000 shares of $10 par value common stock outstanding at all times, and retained

Question:

Sarko Company had 300,000 shares of $10 par value common stock outstanding at all times, and retained earnings balances as indicated here:

Retained Earnings

January 1, 2010......$260,000

January 1, 2011......540,000

January 1, 2012......630,000

January 1, 2013......820,000

Pelzer Company acquired Sarko Company stock through open-market purchases as follows:

Sarko Company had 300,000 shares of $10 par value common

Sarko Company declared no dividends during this period. The fair values of Sarko Companyâ€™s assets and liabilities were approximately equal to their book values throughout this period (2010 through 2012). Pelzer Company uses the cost method.

Required:
A. Prepare a schedule to compare investment cost with the book value of equity acquired.
B. Prepare elimination entries for the preparation of a consolidated statements workpaper on December 31,2012.

Common Stock
Common stock is an equity component that represents the worth of stock owned by the shareholders of the company. The common stock represents the par value of the shares outstanding at a balance sheet date. Public companies can trade their stocks on... Par Value
Par value is the face value of a bond. Par value is important for a bond or fixed-income instrument because it determines its maturity value as well as the dollar value of coupon payments. The market price of a bond may be above or below par,...